Mary Lynn Lenz, who has over four decades of experience in the banking industry, has a simple reason for stepping aside as chairman after two years at Nano Banc and becoming its chief executive.
“I still have too much gas left in the tank,” Lenz told the Business Journal. “I don’t think age is a hurdle. You have to ride it.”
Lenz is taking over an Irvine-based bank that began in 2018, with the promise of using online technology to make banking easier and cheaper. The bank, which focuses on commercial real estate in Southern California, shot up to $1.3 billion in assets by 2021, ranking it as the sixth largest bank with headquarters in Orange County. It also ran into regulatory scrutiny that resulted in the removal of its original executives.
Lenz replaced R. Scott Racusin, who retired in June after two years as CEO.
“Some of the board said to me, ‘Is there any chance you could step in?’” Lenz said. “I considered it and said, ‘Why not?’”
Replacing Lenz as board chairman is another director, Lynn McKenzie-Tallerico, who also has more than four decades of banking experience. McKenzie-Tallerico is known for her knowledge of banking operations and expertise in risk management and internal controls. She served as national advisory partner for regional and community banks for KPMG LLP, helping to coordinate advisory services to one of the largest industry segments, such as strategy and finance.
“Lynn is a crown jewel” in community banking circles, Lenz said. “I couldn’t have asked for a better partner to lead this ship forward.”
The Turnaround Banker
Lenz’ resume includes four decades in financial services, most recently as CEO of an Arizona division after a merger with Glacier Bancorp (NASDAQ: GBCI).
She became known for turning around troubled banks. She was CEO of Pasadena-based Professional Business Bank, which was a distressed, private equity owned $239 million commercial bank. She successfully recapitalized it, sold it to California General Bank and then merged it with Bank of Manhattan in 2012. At Slades Bank in Massachusetts, she turned around a $420 million publicly traded bank that was under FDIC disciplinary status.
Nano Banc was founded by Mark Rebal, who became chief executive; Mark Troncale, who became president; and Anthony Gressak, who became chief credit officer. The three had worked together at California Republic, which was founded in 2007 and acquired for $330 million by Mechanics Bank in 2016.
Nano’s first chairman was Randy Rector, owner of Irvine’s Realty ONE Group West and HomeSmart Evergreen Realty, which offers real estate escrow services through its in-house company Escrow Options Group Inc.
In 2017, the three co-founders raised $71.7 million in equity capital to acquire commercial banks in Southern California. In May 2018, they bought Commerce Bank of Temecula Valley for $23.3 million and renamed it Nano Banc. At that time, the bank had $60 million in loans and deposits.
The bank then said it didn’t invest in “the more common brick-and-mortar approach” and said that its proprietary technology permitted it to deliver products “without the steep price tag.”
Regulators criticized the bank’s governance, staffing and lending practices, especially in commercial real estate. They told the startup to slow down and make sure all the proper checks and balances were in place.
The agencies questioned whether the bank was adequately staffed and if its board of directors was receiving the appropriate information.
In 2021, the bank received an order from federal and state regulators to hire a new chief executive, chief financial officer and chief credit officer. It also required the bank to achieve the minimum number of directors required under applicable state law, with a majority being outside directors.
Nowadays, the bank still has many of its original investors, although none is a majority owner, Lenz said.
Fast Growth Unwanted
In 2020, executives told the Business Journal that its goal was to become one of the largest banks in Southern California by 2025.
The bank’s fallen far short of that goal as its assets fell to $945 million a year ago and have since rebounded to $1.06 billion.
The bank’s press release last week said its goal is to “responsibly grow the bank.”
Was too fast of growth a problem?
“This bank faced a lot of challenges, especially when you come in as a new bank and it grows quickly,” Lenz said.
“It’s something that we’ve seen before. We’re now positioned appropriately.
“Growing too fast in any company isn’t the prudent way to grow a company,” Lenz added. “My experience is to focus on efficiency and productivity, make sure we’re compliant and be the community bank that clients want to bank.”
High CD Rates
In its earlier days, Nano Banc’s website would highlight interest rates on its certificate of deposits that were relatively high compared to rival banks. Last week, its website didn’t mention interest rates on CDs or deposits.
“I don’t think any banks should be in a position to be driven by rates,” Lenz said. “It’s not in the best interests of the bank. Rates are not what makes a client come to the bank.”
The bank has two branches – in Temecula and Irvine. Unlike the original management, she doesn’t rule out new branches, saying it might make sense to consider such options.
However, she said banking has changed monumentally in recent years away from branches.
“My 92-year-old mother-in-law banks online,” Lenz said. “I have children in their 40s who have never been in a bank.
“Customers can bank the way they want to bank.”
Nano Banc in 2020 had about 70 employees with plans to expand to around 200. Lenz declined to provide the current number of employees, saying it doesn’t matter as much as in prior years. She said the bank has “assembled a best-in-class leadership team” with “significant talent.”
“We have the opportunity to be something really different in Orange County.
“We got an edge because of our quality and character.”
